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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 9 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.10. The lowest was -2.93. And the median was -2.59.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Verisk Analytics Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0746||+||0.528 * 0.9705||+||0.404 * 1.2118||+||0.892 * 1.2207||+||0.115 * 0.7801|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2124||+||4.679 * -0.0472||-||0.327 * 0.8976|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $297 Mil.|
Revenue was 492.701 + 560.562 + 550.401 + 497.65 = $2,101 Mil.
Gross Profit was 319.424 + 346.867 + 340.234 + 302.454 = $1,309 Mil.
Total Current Assets was $587 Mil.
Total Assets was $5,459 Mil.
Property, Plant and Equipment(Net PPE) was $342 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $1,417 Mil.
Long-Term Debt was $2,272 Mil.
Net Income was 92.639 + 113.757 + 131.814 + 163.32 = $502 Mil.
Non Operating Income was 0.044 + -0.15 + 17.912 + 84.966 = $103 Mil.
Cash Flow from Operations was 303.879 + 103.643 + 164.543 + 84.511 = $657 Mil.
|Accounts Receivable was $227 Mil.
Revenue was 384.293 + 464.864 + 448.665 + 423.554 = $1,721 Mil.
Gross Profit was 250.509 + 271.282 + 267.792 + 251.084 = $1,041 Mil.
Total Current Assets was $454 Mil.
Total Assets was $2,404 Mil.
Property, Plant and Equipment(Net PPE) was $304 Mil.
Depreciation, Depletion and Amortization(DDA) was $147 Mil.
Selling, General & Admin. Expense(SGA) was $220 Mil.
Total Current Liabilities was $710 Mil.
Long-Term Debt was $1,100 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(297.312 / 2101.314)||/||(226.637 / 1721.376)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1040.667 / 1721.376)||/||(1308.979 / 2101.314)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (586.783 + 341.989) / 5459.147)||/||(1 - (453.993 + 303.829) / 2404.499)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(146.967 / (146.967 + 303.829))||/||(245.55 / (245.55 + 341.989))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(325.421 / 2101.314)||/||(219.886 / 1721.376)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2271.879 + 1416.879) / 5459.147)||/||((1100.358 + 709.77) / 2404.499)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(501.53 - 102.772||-||656.576)||/||5459.147|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Verisk Analytics Inc has a M-score of -2.39 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Verisk Analytics Inc Annual Data
Verisk Analytics Inc Quarterly Data